Friday, March 9, 2018

Most Pro-Tariff and Anti-Tariff Supporters Use the Same Dumb Argument

When President Trump announced yesterday that he was applying tariffs on steel and aluminum, he had at his side steel and aluminum workers to show the jobs he was "creating."

On the other hand, many who are against tariffs argue that while some jobs will be "created" other jobs downstream will be lost.

But both sides are wrong in making the argument this way. Net new jobs are not created or lost because of tariffs. Markets clear, including labor markets. Tariffs may shift the job opportunities but there is no net impact on the number of jobs.

The real problem with tariffs is that it puts upward pressure on prices and shrinks supply, thus resulting in a lower standard of living for all.

Tariffs, in other words, are a shrinking economy problem and have nothing to do with net jobs.